AT HYDERABAD.

F.A. 677/2006 against CC 219/2005, Dist. Forum, Rajahmundry    

Between:

1)  The Sub-Post Master

Danavaipeta Post Office

Danavaipeta

Rajahmundry-533 103.

2)  The Superintendent of Post Offices

Rajahumundry Division

Rajahmundry.                                            ***                         Appellants/

                                                                                                Ops.  

And

The Jampeta Co-operative Urban Bank Ltd.

Rep. by its  Secretary

No. 46-8, Jampeta

Rajuhmundry- 533 101.                             ***                         Respondent/

                                                                                      Complainant.

Counsel for the Appellants:                        Mr.  V. Vinod Kumar

Counsel for the Resp:                                 Served.

F.A. 911/2006 against CC 235/2005, Dist. Forum, Rajahmundry   

Between:

1)  The Sub-Post Master

Danavaipeta Post Office

Danavaipeta

Rajahmundry-533 103.

2)  The Superintendent of Post Offices

Rajahumundry Division

Rajahmundry.                                            ***                         Appellants/

                                                                                                Ops. 

And

The Jampeta Co-operative Urban Bank Ltd.

Rep. by its  Secretary

No. 46-8, Jampeta

Rajuhmundry-533 101.                                       ***                         Respondent/

                                                                                      Complainant.

Counsel for the Appellants:                        Mr.  V. Vinod Kumar

Counsel for the Resp:                                 Served.

                          HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT     

&

                                            SMT. M. SHREESHA, MEMBER

MONDAY, THIS THE  TWENTY NINTH DAY OF JUNE TWO THOUSAND NINE

Oral Order: (Per Hon’ble  Justice D. Appa Rao, President)

                                                          *****

1)                These two appeals are preferred by postal department against the order of the Dist. Forum in separate C.Ds obviously in view of the fact  that both  matters in between the same parties pertain to same subject matter viz., payment of amount covered  under  Kisan Vikas Patras (KVPs).

2)                 The complainant a Co-operative Urban Bank  Ltd.,  purchased

two  KVPs for Rs. 10,000/-  on 31.8.1996  (C.D. No. 219/2005) and two  KVPs for Rs. 50,000/- each on  24.10.1995 and two KVPs for Rs. 50,000/- each on 13.12.1995 (C.D. No. 235/2005).   The maturity value  to  be  paid after 5-1/2 years.   After expiry of the maturity period when the amount was demanded they paid only Rs. 20,000/- as against  Rs. 40,000/- and Rs. 2 lakhs as against Rs. 4 lakhs.  .  Despite their notice they did not pay.   Therefore, it claimed the amount covered under the KVPs  with interest @ 24% p.a., besides  compensation of Rs. 10,000/- and costs.

3)                 The appellant postal department resisted the case.   While admitting issuance of   KVPs  of denomination of Rs. 10,000/-  and Rs. 50,000/- each  and that the complainant had approached for the amount after the period of maturity it alleged that  they could not be paid as  they were purchased in contravention of rules.   It made clear that the bank is not entitled to any interest.   It had agreed to take payment of face value of the  KVPs  pending clarification from the  Ministry of Finance, Government of India.   The rules permit for purchase of KVPs  by individuals. The co-operative bank agreed to abide by the KVP Rules, 1988 while taking the said certificates.    They have categorically informed when they approached through a Consumer Welfare Association.     The Ministry of Finance by letter Dt. 20.4.2004 clarified stating that the complainant was  entitled for the face value of the certificate which was already paid and not entitled to interest.  Therefore, it prayed for dismissal of the complaint.

4)                 The complainant in proof of its case filed the affidavit evidence of its Secretary-in-charge.  The complainant did not file any documents, whereas  the appellants filed relevant  correspondence besides various circulars marked as  Exs. B1 to B5. 

5)                 The Dist. Forum after considering the evidence placed on  record and following the decision of   National Commission in  The Post  Master General, H.P., Circle & Others  Vs. The Khanyara Co-operative Forest Society Ltd reported in 2005 (3) 10  (NC)  opined that the complainant is entitled to interest  @ 12% p.a., from the date of maturity till the date of payment together with costs of Rs.  500/- each. 

6)                 Aggrieved by the said decision the postal department/respondent preferred these appeals contending that the Dist. Forum did not appreciate the facts or law in correct perspective.   It ought to have noticed that  the very purchase of  KVPs by the co-operative bank is contrary to rules notified by the Ministry of Finance , Government of India, and therefore not entitled to interest.   The Supreme Court in  Post Master, Dargamitta HPO, Nellore Vs. Raja Prameelamma, (SLP (Civil) No. 38/1995)  opined that the contract  viz., purchase of certificates was contrary to the terms notified by the Government of India  and therefore not entitled to any interest.   There is no deficiency of service on its part as defined u/s  2(g) of the Consumer Protection Act.  Therefore it prayed that the order under appeals be set-side.

7)                 The point that arises for consideration is whether the complainant/bank is entitled to  interest  from the date of maturity of KVPs till the date of payment?.

8)                 It is not in dispute that the complainant co-operative bank purchased  two  KVPs for Rs. 10,000/-  on 31.8.1996  (C.D. No. 219/2005) and two  KVPs for Rs. 50,000/- each on  24.10.1995 and two KVPs for Rs. 50,000/- each on 13.12.1995 (C.D. No. 235/2005).   The maturity value being Rs. 20,000/- and Rs. 1 lakh respectively to be  paid after 5-1/2 years.   When they were presented after the maturity date, the appellant post office denied payment of the value on the ground that they were purchased contrary to the rules, therefore not entitled to maturity value besides interest.   It is not in dispute  that appellant post office paid the amount shown on the KVPs, however refused to pay maturity value with interest on the ground that they were purchased contrary to the rules. 

9)                 Kisan Vikas Patra Rules, 1988 issued vide Government of India, Ministry of Finance (DEA) Notification  No. GSR 370(E) Dt. 23.3.1988  and further amended from time to time invoking  the powers conferred by Section 12 of  Government Savings Certificates  Act, 1959 (46 of 1959).   Relevant  rule,  Rule  No. 6 reads as follows :

          6.  Types of certificates and issue thereof:  (1)  The certificate shall be of the following types, namely :

          (a)      Single Holder Type Certificates;

          (b)      Joint ‘A’ Type Certificates and

          ( c )    Joint ‘B” Type Certificates;

          (2) (a)   A  Single Holder Type Certificate  may be issued to :-

          (i)       An adult for himself or on behalf of a minor or to a minor

          (ii)      a Trust.

          (Rule amended vide MOF (DEA) Notification No. GSR 119(E)

Dt. 8.3.95 effective from 1.4.1995.

10)               Rule 13 of the  KVP Rules  clarifies  that  any certificates if purchased or acquired in contravention of  above rules,  interest shall not be paid by the postal department.    The Gujarat High Court in Special Civil Application No. 2877/2003  by judgement Dt. 14.7.2004 while   interpreting  Rule 6 and 13 of the KVP Rules  opined that :

          The provision to Rule 13 of the Rules of 1988 is also of no help to the complainant.   A plain reading of the proviso  to Rule 13 presupposes that there must be a legal holder of Kisan Vikas Patra and thereafter  the Central Government must be satisfied that  any purchase of acquisition  of Kisan Vikas Patra  is due to a bonafide error  on the part  of the holder thereof, it may award payment of simple interest on the face value of the certificate.  Thus for applicability  of the proviso to  Rule  13  of the Rules  of 1988, there must be authorised, proper and regular holder as per Kisan Vikas Patra  Rules, 1988 and there may be a bonafide error of such legal holder of Kisan Vikas Patra in purchase of certificate.  For example :  If certificates are purchased  of the amount than maximum limit prescribed under the Rules  or there may be irregularity in issuing fresh  certificates in lieu of  purchase of old certificates, (Under Rule 12 of the  Rules of 1988) or there may be an irregularity  of holding of certificate  of either type “A”  or type “B”  as referred to in Rule 6 of the Rules.  Such type of irregularity  committed in purchase or holding of  Kisan Vikas Patra  by legally  authorised holder thereof, then only, he will be entitled to benefit of proviso  to  Rule 13 of  Kisan Vikas Patra Rules, 1988. 

11)               In the instant case the  co-operative bank cannot hold  or acquire Kisan Vikas Patra  and it is not a legal and authorised  holder of  Kisan Vikas Patra.   Therefore, it is not entitled to benefit of interest  as per Rule 13  not it is entitled to get the benefit of simple interest  at the rate prevailing  under Post Office Savings Account Rules, 1981.   In short, the complainant is not entitled to get the benefit under the main part of Rule 13 nor under the proviso thereof.

12)              Further, Gujarat High Court in Special Civil Application No.  7913/90  wherein  National Savings Certificates  were purchased by  an association  of persons  in which case the Court by judgement Dt. 23.6.2004 held that  the Central Government has maintained consistency in both, NSC (VI  Issue) Rules, 1981  and KVP Rules, 1988 and in none of the case, if the petitioner is not entitled to hold the certificates, then the said petitioner shall also not be entitled to earn the interest thereupon.  There is hardly  any scope of taking any deviation departure from clear, unambiguous and unequivocal provisions of KVP rules.  What is prohibited by Rules cannot be permitted by this Court.”

13)     Rule 6 does not permit the co-operative bank to purchase KVPs.  They were purchased on  24.10.1995,  13.12.1995 and  31.8.1996. 

14)              Hon’ble Supreme Court of India in  The Post Master, Dargamitta, HPO, Nellore Vs. Ms. Raja Prameelamma in SLP (Civil) No. 38/1995   held  that  if  NSCs were given contrary to the rules,   it does not become a contract binding the Government of India  being unlawful  and void.  It cannot be said that there was deficiency of service  either in terms of the law or  in terms of the contract as defined in section 2(1)(g) of the Consumer Protection Act.

15)               At the cost of repetition, we may state that when the co-operative bank  had purchased the KVPs  contrary to the rules, it cannot turn round and claim maturity amount.  It should not be permitted to contend that by virtue of  deposit,  the post office  might have earned amounts and would amount to unlawful enrichment and therefore liable to pay the amount.     

16)               In the light of findings of the Supreme Court in categorical terms, when the purchase  itself is illegal and irregular  the co-operative bank is not entitled to the amount claimed.   The rules are very clear and unambiguous.  What is prohibited  by the rules  cannot be permitted by this Commission. 

17)               None-the-less the co-operative bank is entitled to get back the principal amount of  Rs. 10,000/- and Rs. 50,000/- only   under each of the bond. The complainant is not entitled to either maturity value or subsequent interest

18)               In the result  the appeals are allowed, consequently the order of the Dist. Forum in C. C. No. 219/2005 and C.C. No. 235/2005 is set-aside.  Since the appellant  had already paid the value covered under KVPs the complainant is not entitled to any more amount either maturity value or subsequent interest.    Consequently complaints  C. C. No. 219/2005 and C.C. No. 235/2005 are  dismissed    However, in the circumstances of the case each party to bear its own costs.   

1)       _______________________________

      PRESIDENT           

2)      ________________________________

          MEMBER           

                                                                   Dt.    29. 06.  2009.